Working from home and tax relief

Introduction

Working from home (also known as remote working or e-working) is where you work from home for substantial periods on a full- or part-time basis.

You may be able to claim tax relief on the additional costs of working from home, including electricity, heat and broadband.

This document provides practical information and advice on tax relief for working remotely from home.

Budget 2022

It was announced in Budget 2022 that income tax relief for remote working in 2022 will be available at 30% of vouched expenses for electricity, heating and internet services for days spent working from home.

How do I know if I qualify?

E-working is where you work from home for substantial periods on a full- or part-time basis.

To qualify as an e-worker, you must:

  • Have a formal agreement with your employer that you are required to work from home
  • Be required to perform essential duties of employment at home

E-working involves:

  • Working for substantial periods at home
  • Logging onto a work computer remotely
  • Sending and receiving email, data or files remotely
  • Developing ideas, products and services remotely

You are not entitled to claim tax relief if you bring work home from the office outside of normal working hours, for example in the evenings or at weekends.

More information on the eligibility criteria is available in Revenue’s Tax and Duty Manual on e-Working and Tax (pdf).

I am a cross border worker, am I eligible?

If you are a cross border or frontier worker employed in the Republic of Ireland and normally resident in Northern Ireland, and you meet the other eligibility criteria, you can also claim tax relief on e-working.

How much can I claim?

You may have extra costs when you are working from home including heating, electricity and broadband costs. Your employer can pay you a contribution towards these costs or you can make a claim for tax relief at the end of the year.

If your employer pays you a working from home allowance towards these expenses, you can get up to €3.20 per day without paying any tax, PRSI or USC on it. If your employer pays more than €3.20 per day to cover expenses, you pay tax, PRSI and USC as normal on the amount above €3.20. You should note that employers are not legally obliged to make this payment to their employees.

If your employer does not pay you a working from home allowance for your expenses, you can make a claim for tax relief at the end of the year. You will get money back from the taxes you paid.

If you share your bills with someone else, the cost is divided between you, based on the amount paid by each person – see Example 2 below.

Your refund of tax is based on:

  • How many days you worked from home
  • The cost of the expenses
  • Revenue’s agreed rate for calculating the cost of running a home office

Revenue’s rate for the cost of running a home office is 10% of the cost of electricity and heating. This means that you can claim 10% of the total amount of allowable utility bills against your taxes. You can also claim 30% of broadband costs for the tax year 2020. This applies for the duration of the COVID-19 pandemic.

You can only claim for the days that you work from home. This does not include times you may have brought work home to do outside your normal working hours.

If your employer pays you an allowance towards your expenses, the amount paid is deducted from the amount you can claim back from Revenue.

Example 1

Mary works from home for 9 months while her office is closed due to COVID-19. To make a claim Mary needs to work out how many working days she worked from home - she should exclude weekends, public holidays and any annual leave taken during the 9 months she worked from home. Her total working days are 168 (275 calendar days, less 78 weekend days, 7 public holidays and 22 annual leave days).

During 2020, her household bills for heating and electricity come to €1500 and her broadband comes to €450.

To find out how much tax she can claim back, Mary:

  • Multiplies the amount due on the utility bills by the number of days she worked (€1500 x 168 = 252,000)
  • Then, she divides her answer by 366 (252,000 / 366 = €689)
  • Lastly, she calculates 10% of this amount to find out what she can claim for heating and electricity (10% of €689 is €69)

Mary uses the same method to see how much tax she can claim back on broadband.

  • €450 (broadband bill) x 168 (days worked) = 75,600
  • 75,600 divided by 366 = €207
  • Revenue will let Mary claim 30% of the cost of broadband. 30% of €207 is €62.

(Note: when calculating relief for 2020 divide by 366 days. For 2021 it will be 365 days.)

This means, at the end of the year, Mary can claim tax back on expenses of:

  • €69 for heating and electricity
  • €62 for broadband
  • €131 in total

The amount she gets back depends on her rate of tax. If she pays tax at the higher tax rate of 40% she will get €52.40 back from her taxes (40% of €131). If she pays tax at the lower rate of 20%, she will get €26.20 back (20% of €131).

Example 2

Sharon and Lar are married and both worked from home for 181 days while their offices are closed due to COVID-19. Their household bills for heating and electricity come to €1950 and their broadband comes to €600. They split the bills equally between them and each calculate the portion they can claim.

(Note: when calculating relief for 2020 divide by 366 days. For 2021 it will be 365 days.)

Cost of electricity and heat

Amount paid each €975 x 181 = 176,475

Divided by 366 = €482

10% allowable cost = €48

Cost of broadband

Amount paid each €300 x 181 = 54,300

Divided by 366 = €148

30% allowable cost = €45

At the end of the year, Sharon and Lar can each claim tax back on expenses of:

  • €48 for heating and electricity
  • €45 for broadband
  • €93 in total

The amount they gets back depends on their rate of tax. If they pay tax at the higher tax rate of 40% they will each get €37.20 back (40% of €93). If they pay tax at the lower rate of 20%, they will each get €18.60 back (20% of €93).

What expenses can I claim?

Tax relief on e-working covers the additional costs of working from home. This includes:

  • Heating
  • Electricity
  • Broadband
  • Other vouched expenses where they are “wholly, exclusively and necessarily” part of your work

Items you buy, such as laptops, computers, office equipment and office furniture, are not allowable costs.

Should I pay tax on equipment from my employer?

If your employer gives you equipment that you need to do your work, like a computer or printer, and you mainly use it for work, it is not considered a benefit in kind. This means that you do not have to pay any tax for receiving the equipment from your employer.

Capital Gains Tax

If you use only part of your home for e-working, your home remains your Principal Private Residence and you are not liable for CGT when you sell it.

You can get more information from Revenue.

How to apply

You can claim tax relief online using Revenue’s myAccount service. You can use Revenue's Receipts Tracker App to upload your receipts and bills. You can watch a short video explaining how to upload receipts.

To complete an Income Tax return online use the following steps:

  1. Sign into myAccount
  2. Click on ‘Review your tax’ link in PAYE Services
  3. Select the Income Tax return for the relevant tax year
  4. In the ‘Tax Credits and Reliefs’ page (Page 4 of 5) select the ‘Your job’ tab. Select ‘Remote Working Expenses' and insert the amount of expense at the ‘Amount Claimed’ section

You must be able to account for each expense you intend to claim. This means keeping a record of all receipts and bills. You should keep all documentation relating to your claim for 6 years from the end of the tax year to which the claim relates.

You may also need a letter from your employer stating that you work from home.

Page edited: 13 October 2021